IRS Regulation 6050W

During a recent trip to a school district in the mid-Atlantic, I overheard two AP clerks lamenting the difficulties they were having in getting the 1099-MISC forms out the door in a timely fashion. Being new to procurement cards, they were sifting through a number of transactions made to vendors with only a casual association to the district. Fearing that they were responsible for 1099 reporting, IRS regulation 6050W was able to brighten their day.

Beginning in 2011, the IRS shifted the burden of 1099 reporting for procurement card transactions from the card user (the school district) to the credit card company (VISA, Mastercard etc.). Originally designed as a mechanism to capture income reporting for large on-line sellers or services such as EBay, 6050W has had the unintended consequence of saving school districts from reporting for their procurement card transactions.

Given that procurement card usage continues to grow throughout school systems nationwide, we should see a proportionate drop in 1099-MISC reporting. In fact, one business manager recently commented to me that she had ratcheted her procurement card usage up to 80% of all AP transactions, and had correspondingly dropped her 1099-MISC forms to under a dozen.

Is Regulation 6050W something you were made aware of at your school district? Have you changed your procurement card usage because of it? Let us know in the comments.

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Published by John L. White

John has been with Tyler since the Fall of 1999. During his tenure he has served in both project management and solution consultant roles. In the 11 years prior to joining Tyler, John held the position of IT Director for both the Town of Shrewsbury MA and the City of Lowell MA. He holds an M.B.A. from the University of Massachusetts and a B.S. Chemical Engineering from the University of Lowell.
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